Further to our earlier briefing, the EAT has now issued its written decision in the Woolworth’s case. Collective redundancy consultation will now be triggered on numbers alone, regardless of the location of employees within the UK.
What is the background to the case?
Ethel Austin and Woolworths were UK businesses which found themselves in financial difficulties and ultimately went into administration. Both had multiple stores throughout the UK and thousands of jobs were lost.
The recognised unions brought Tribunal claims against the administrators, alleging that the employers had failed to comply with their duty to collectively consult. Under the UK legislation (section 188 of the Trade Union and Labour Relations (Consolidation) act 1992) an employer must consult with appropriate employee representatives if it is “proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less…”
A protective award of up to 90 days’ pay in each case can be awarded for any failure to collectively consult.
What had happened previously in the case (at the Tribunal level)?
The Tribunals in each case found that there had been a failure to comply with the duty to consult, but that each store could be treated as a separate establishment. Therefore, it was held that the duty to consult collectively did not apply to any store with fewer than 20 employees.
Protective awards were ordered for employees in the larger stores, i.e. those with more than 20 employees. This meant that approximately 4,400 workers across the two employers did not receive protective awards.
What was to be decided at the EAT?
The sole issue to be decided in the case was whether a duty to consult collectively with employee representatives is owed when 20 employees are to be dismissed, or when 20 employees are to be dismissed in any one establishment. Essentially, it was a choice between a site-by-site approach, or a holistic approach.
What was decided?
The EAT held that the holistic approach should be adopted.
It was held that the underlying EU Collective Redundancies Directive (which, in this context, does not refer to single establishments) requires that the employers should have consulted with all of the employees, not just those at stores with 20 or more employees. Until now, although this difference had been recognised, the UK courts had been unwilling to depart from the wording in the UK legislation.
However, the EAT held that, even though the UK legislation clearly sets out an ‘establishment test’, it should be interpreted purposively to give full effect to the EU Directive. It held that this should be achieved by deleting the words “at one establishment” from the UK legislation so that collective redundancy requirements will be triggered whenever an employer contemplates dismissing 20 or more employees for redundancy within 90 days, regardless of the number of sites / offices it has within the UK.
The result of the case is that all of the employees from the smaller stores became entitled to a protective award.
Could this decision be appealed?
Yes, potentially. It is unknown whether there will be any attempt to take the case to the Court of Appeal.
What is the impact for employers?
The EAT’s ruling is of real significance for employers who operate a number of offices or sites across the UK.
Once it is proposed by an employer that at least 20 employees are to be made redundant, their place of work and location will be irrelevant for the purposes of triggering collective consultation obligations.
For those who are in the middle of a collective redundancy consultation, consideration should be given as to whether there are any affected employees at smaller sites or offices who should have been included in the consultation process. It may be necessary to restart the consultation process to include these sites.
What about employees within a group structure?
The ruling does not mean that employees across any wider group structure would need to be considered holistically for the purposes of collective consultation. The obligations still apply only in respect of an “employer”, so each employing entity within the group should be considered separately.